From the Crucibles of JPS Customer Value Academy
Just Plain & Simple
….. Helping Create Customer Value
Every
organisation is in search for ways to enhance productivity. With ever
increasing competition, costs and complexities, only the fittest survive. Hence,
the demand for higher productivity from all resources – people, material, time,
money …..
‘Cost
cutting’ ends up becoming the favoured buzz words (with the recent recession,
probably rightly placed too) in almost all organisations ….. ‘Do more with
less’ kind of slogans finding a prominent place in corporate presentations. There
is absolutely nothing wrong with these as guiding principles for operations. However,
neither of them yields the best outcomes without an understanding of the
organisational context. Hence, for example, while ‘frivolous’ expenses are
definitely not desirable, cost cutting can add to productivity only to the
extent that it cuts flab. Beyond a limit, you ‘cannot cost cut your way to
glory’ for productivity.
Economics is the science/art which studies human
behaviour as a relationship between ends and scarce means which have
alternative uses - Lord Robbins.
This is probably the most useful and practical
principle that can help in productivity increase, if understood well. The
subtle meaning captured in this definition throws open the spectrum of possible
ways in which organizational resources can create an impact. Alongwith the
following statement by Archimedes, it provides a robust model for productivity
increase.
Give me a lever
long enough and a fulcrum on which to place it, and I shall move the world – Archimedes.
Productivity,
in its very simple mathematical/scientific form, is a ratio of output over
input. Or in business context, Return on Investment. This can be depicted as a
product of (A) Profit/Sales & (B) Sales/Investment. These ratios dance in a
colourful spectrum when viewed through the prism of organisational context !!
Robbins and Archimedes together provide the canvas and brushes respectively, with
which to paint organisational success.
A
statement like ‘Do more with less’, breaks up into multiple hues, when passed
through The Productivity Prism of organisational context. These are :
1)
Do less with much less
2)
Do same with less
3)
Do more with same
4)
Do much more with more
On
the spectrum from 1) to 4) are choices available to organisations operating in
different situations ….. a shrinking/contracting scenario, holding ground,
marginal growth or a high growth environment needing investments respectively !!
In situation 1) above, if input is reduced in a manner that output is not reduced
to the same extent, the resulting ratio of productivity still ends up being
better. The same ‘mathematical’ logic applies to the other three cases as well.
However,
in the absence of human intervention, these are ‘passive’ mathematical ratios.
In business, as in life, there is available the option of ‘managerial’
discretion and ‘free will’. This can influence the way these ratios behave,
rather than being handed over in a ‘fatalistic’ take it or leave it manner. Understanding
and picking the Right ‘shade’ can make all the difference. The palette thus
exposed by The Productivity Prism can be used suitably to come out with flying
colours !!
Robbins
helps when you try to understand the ‘Core Customer Deliverable’ and ‘What in
the Value Chain adds most Value to The Customer’. It is such a help in the
allocation of scarce means (with alternative uses; and mind you, organisations
always have finite resources) for an optimal outcome.
Archimedes
helps by pointing out that unless the ‘leverage ratio’ is calibrated and fixed
well, movement at the other end of the organisational ‘lever’ will be sub-optimal.
Robbins
and Archimedes provide the canvass and brush. The palette is made available through
The Productivity Prism. The only thing that one now needs is a ‘thinner’ to
dilute the paint to the right consistency, so as to be able to get the ‘Right
Flow and Application’.
Organisations
can gain through external expert help here. There are tools available for understanding
cause-effect relationships between various parameters, risk analysis and
prioritisation of issues. Such tools can provide the right ‘consistency’ to
enable decision making with Optimal Innovative Solutions.
Theory
of Constraints, Lean & JIT manufacturing and Kaizen (continuous improvement)
are some of the tools available for today’s managers to continuously improve
their productivity leading to a phenomenal improvement in profitability.
Theory
of Constraints:
The theory of
constraints (TOC), introduced by Eliyahu M.
Goldratt in
his 1984 book titled The Goal, adopts
the common idiom "A chain is no stronger than its weakest link" as a
new management paradigm. This means that processes, organizations, etc., are
vulnerable because the weakest person or part can always damage or break them
or at least adversely affect the outcome.
The
analytic approach with TOC comes from the contention that any manageable system
is limited in achieving more of its goals by a very small number of
constraints, and that there is always at least one constraint. Hence the TOC
process seeks to identify the constraint and restructure the rest of the
organization around it, through the use of five focusing steps.
Assuming the goal of a system has been articulated and its
measurements defined, the steps are:
1.
Identify the system's constraint(s) (that which prevents the
organization from obtaining more of the goal in a unit of time)
2.
Decide how to exploit the system's constraint(s) (how to get the
most out of the constraint)
3.
Subordinate everything else to above decision (align the whole
system or organization to support the decision made above)
4.
Elevate the system's constraint(s) (make other major changes
needed to break the constraint)
5.
If in the previous steps a constraint has been broken, go back to
step 1, but do not allow inertia to cause a system's constraint.
The
goal of a commercial organization is: "Make money now and in the
future", and its measurements are given by throughput
accounting as: throughput, investment, and operating
expenses.
The
five focusing steps aim to ensure ongoing improvement efforts are centered
around the organization's constraint(s). In the TOC literature, this is
referred to as the process
of ongoing improvement (POOGI).—(Source
Wikipedia)
TOC enables the organisations to substantially increase their output
by understanding the constraints that are blocking them to increase output, focus
their resources on surmounting those constraints, thus maximising the output
using existing resources thus leading to increase in productivity.
LEAN:
Lean is a practice in production of a product or a service, that focuses on eliminating
wasteful expenditure that does not create any value for the customer or those
who consume the product or the service.
TQM: Widely used in Manufacturing and Service industries, TQM or Total Quality Management is an organizational strategy aimed at improving productivity by encouraging Quality Consciousness across the organization by focusing on doing it right first time, thus eliminating wast due to duplication of effort thus improving productivity.
TQM: Widely used in Manufacturing and Service industries, TQM or Total Quality Management is an organizational strategy aimed at improving productivity by encouraging Quality Consciousness across the organization by focusing on doing it right first time, thus eliminating wast due to duplication of effort thus improving productivity.
Six Sigma: Originally used by Motorola and later on popularised globally as a revolutionary approach to enhanced productivity through systematised elimination of defects, Six Sigma" refers to the ability of highly capable processes to produce output within specification. In particular, processes that operate with six sigma quality produce at defect levels below 3.4 defects per (one) million opportunities (DPMO).
Six Sigma's implicit goal is to improve all processes to that level of quality or better.
JIT:
Just in Time (JIT), is a production strategy that involves, minimizing the in- process
inventory and carrying costs involved in the manufacturing of a product or a
service.
Kaizen-
Kaizen or continuous improvement is a process used by organizations to evolve
continuously by systematically improving the output per a unit of input.
Conscious use of strategies like TOC, Lean, TQM, Six Sigma, Kaizen, JIT can multiply the productivity and efficiency of
an organization leading to an unending growth with increased profitability and enduring success.
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J.P.Singh
Justplainandsimple Consulting Pvt. Ltd.
JPS Consulting
Just Plain & Simple
….. Helping Realise Potential
JPS Customer Value Academy
Just Plain & Simple
….. Helping Create Customer Value
Website : www.justplainandsimple.com
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